The Covid-19 pandemic has led to major disruptions to local and global value chains (GVCs), with consequences for businesses, consumers and the global economy. At the same time, the crisis has brought the complexity of international production fragmentation and the dependence on global supply chains into the spotlight.
This outbreak has come at a time when globalisation was already in retreat due to ongoing trade tensions between the US and China and growing uncertainty over the future of free trade in general, with a slowdown in global trade and GVC integration being observed over the last decade.
Still, GVCs are here to stay and have proven to be highly important, even in times of crisis. While the service industry (tourism, hospitality and transport in particular) has been predominantly affected by the great global lockdown and social distancing measures to contain the virus, the manufacturing industry has proven to be more resilient. In the immediate aftermath of the crisis, countries have quickly reacted to stabilise the trade of goods to address shortages in the supply of essential goods such as food and medicine. However, the crisis has also exposed the strong dependence on a few global suppliers in industries producing essential and strategic goods. In the medium to long-term, countries and firms are expected to put more emphasis on the diversification, resilience and robustness of value chains, in which a combination of international trade with local and regional value chain clusters will likely prevail.
Understanding the international fragmentation of production and the patterns of global value chain networks is not only relevant to comprehend business realities. It also offers an appropriate framework to assess and inform trade, development and investment policies that can promote competitiveness and allow firms to reap opportunities in entering or diversifying participation in global value chains.
The below diagnostic briefs present original analysis and deep dives on several topics, with a focus on the Southern and Eastern Mediterranean (SEMED) region:
GVC diagnostic: the Southern and Eastern Mediterranean region
GVC country diagnostic and deep dives
GVC case studies
- Export opportunities for SEMED countries from diversification and resilience in GVCs
- The textile sector in Jordan
- The automotive sector in Morocco
Annex: Mapping Global Value Chain integration in the EBRD region
The analysis was supported by the Trade and Competitiveness Programme, implemented by the European Bank for Reconstruction and Development and financed by the European Union.